THE GLOBAL APPEAL OF HOSPITALITY REAL ESTATE: A PREQIN & PRO-INVEST REPORT
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THE GLOBAL APPEAL OF HOSPITALITY REAL ESTATE: A PREQIN & PRO-INVEST REPORT
Contents
Preqin is proud to present The Global Appeal of Hospitality Real Estate: A Preqin & Pro-invest Report, published in
partnership with Pro-invest Group.
5 Global Tourism Trends 16 Performance – Drivers of Growth:
6 Hospitality Investing Moves into the Mainstream Outperformance
– Preqin 18 Investors – Global Investors Flock to Hospitality
8 Opportunities in Hospitality and the Select Real Estate
Service Market – Pro-invest 20 Deals – Hospitality Real Estate Sees Healthy
10 Taking Select Service Hotels to the Next Level – Deal Flow
Ronald Stephen Barrott, Pro-invest 22 Assets under Management – Rise of a
14 Fundraising – Funds Closed Hit Record High in Global Market
2018
About Pro-invest Group
Founded in 2010, Sydney-based Pro-invest Group (Pro-invest) is an asset manager and investment firm with
close to AUD 2bn in assets under management. Pro-invest specializes in private equity real estate and real
estate asset management, and has become one of the largest hotel investment platforms in Australasia. With
more than 30 sector-specific specialists in its Sydney office, Pro-invest operates as a locally established,
integrated private equity real estate business combining active asset management, development and operational
capabilities, providing its investors with above-industry risk-adjusted returns in the hospitality, commercial
and retail spaces. Under its unique structure, Pro-invest ensures full control of the entire value chain, allowing
for effective sustainability management, risk mitigation and return optimization. Further, Pro-invest is a proud
GRESB member.
www.proinvestgroup.com
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and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice
of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in
law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of The Global Appeal of Hospitality Real Estate: A Preqin & Pro-invest Report. While
reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not
make any representation or warranty that the information or opinions contained in The Global Appeal of Hospitality Real Estate: A Preqin & Pro-invest Report are accurate, reliable, up to date or
complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within The Global
Appeal of Hospitality Real Estate: A Preqin & Pro-invest Report or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.
© Preqin Ltd. www.preqin.com 3Global Tourism
Trends
Global Growth Record Investment
International tourist arrivals grew 5% in 2018 to Over $110bn of private capital has been invested
reach the 1.4
billion mark. This figure was in the hospitality sector since the beginning of 2016,
reached two years ahead of UNWTO's with a record $28bn invested in 2017.
forecast. 1
Asia-Pacific Growth Outperformance
Growth in international tourism figures was seen The hospitality sector has seen strong performance
in all regions shown in Fig. 1. But at an increase of in recent years. Median net IRRs in the
7% from 2017 to 2018, Asia-Pacific represents the hospitality space surpassed those for
highest growth market for international industrial, residential, retail and diversified funds
tourism in 2018. 2
for vintages 2011, 2013 and 2015.
Fig. 1: Map of International Tourist Arrivals and Tourism Expenditure
AMERICAS EUROPE ASIA & PACIFIC
216 million +2% 710 million +5% 348 million +7%
$334bn +0% $570bn +5% $435bn +7%
AFRICA MIDDLE EAST
International Arrivals 67 million +7% 60 million +5%
International Tourism
$38bn +2% $73bn +4%
Expenditure
Source: World Tourism Organization (UNWTO), July 2019
1
UNWTO. World Tourism Organization. International Tourism Highlights, 2019 Edition: http://www2.unwto.org/publication/unwto-tourism-highlights-2018
2
Ibid.
© Preqin Ltd. www.preqin.com 5THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
Hospitality Investing
Moves into the
Mainstream
Outperformance is attracting a record amount of international capital into the sector
Hospitality, once seen as a niche segment of the real their holidays abroad. 2019 looks set to be another
estate market, is increasingly viewed as part of the strong year for travel and tourism, according to JLL.2
mainstream. As the hunt for yield intensifies and
more institutional capital flows into the sector, private Healthy Deal Flow
equity real estate (PERE) fundraising in this space has With dry powder steadily increasing, PERE deal activity
been robust: the amount of capital secured by funds in the hospitality sector has soared in recent years.
targeting hospitality has almost trebled (2.8x) since Between 2012 and 2017, PERE deal value grew by more
2010, outpacing the global market (2.4x). The number than 210% to hit a record $28bn, before slipping to
of funds has grown as well. A record 62 funds targeting $27bn in 2018. So far in 2019, there have been several
hospitality held a final close in 2018, highlighting PERE hospitality deals across the globe that are sized
strong investor appetite. at $500mn or more.
What’s driving investor demand? In a word: These include Blackstone Group’s €900mn portfolio
outperformance. In recent years hospitality real sale of seven hotel properties in Germany, the
estate returns have surpassed those of public market Netherlands and Belgium to Aroundtown Property
benchmarks such as the MSCI US REIT Index, for Holding; the JPY 62,400mn sale of the Hilton Tokyo
instance. Hotels have also outperformed other Odaiba, located in Tokyo, by a joint venture between
property types. Median net IRRs generated by vintage Fuyo General Lease and Hulic to Japan Hotel REIT
2011 (+20.3%), vintage 2013 (+19.0%) and vintage 2015 Investment Corporation; and the $610mn sale of 1
(+14.7%) hospitality funds have exceeded those of Hotel South Beach, located in Miami Beach, Florida, by
residential, retail, industrial and diversified property a joint venture of Starwood Capital Group, Ashkenazy
funds, Preqin data shows. Acquisition and LeFrak to Host Hotels & Resorts.
A key driver underpinning hospitality’s outperformance Hospitality's Growing Global Footprint
is the steady growth in international tourism, which Funds investing in North American hospitality markets
is boosting hotel occupancy rates and revenue per continue to dominate, with $24bn secured in 2018,
available room (RevPAR). According to the World comprising 84% of global fundraising. But other
Tourism Organization (UNWTO), in 2018 international regions are attracting more capital as well. As of
tourist arrivals rose by 5% to 1.4 billion, reaching this August 2019 hospitality funds investing in Europe have
figure two years ahead of UNWTO’s original forecast.1 raised $3.0bn, which is more than the total collected
This rise is driven in part by the growing number of last year ($2.9bn). Hospitality funds investing in North
middle-class families in emerging economies such as America have raised $3.9bn in the year to August 2019.
China and Indonesia that are increasingly spending While this does represent a decrease from previous
1
UNWTO. World Tourism Organization. International Tourism Highlights, 2019 Edition: http://www2.unwto.org/publication/unwto-tourism-highlights-2018
2
JLL, Hotel Investment Outlook 2019
6years, several large funds are currently in market.
Rockpoint Group’s Rockpoint Real Estate Fund VI is
seeking $3.3bn for investments principally in the office,
multi-family and hospitality sectors in major markets
across the US. For hospitality funds,
In terms of strategy, opportunistic and value added
we generally look for
continue to account for most of the capital raised by managers with a strong
hospitality funds, making up 58% of the total collected
in 2018. At the same time, debt-focused vehicles are track record in the sector,
attracting more interest, comprising 39% of the total
raised in 2018 vs. 31% in 2017.
that have the ability to
turn around the asset by
While there are concerns that a weakening global
economy may weigh on international tourism, factors improving asset quality,
such as destination appeal and currency valuation will
continue to shape traveller behaviour.3 The world’s top
providing incentives to
10 tourism destinations, as measured by international the local asset manager,
tourism receipts, generated close to 50% of total
tourism receipts in 2018, according to the UNWTO. maximizing food and
These 10 are the US, Spain, France, Thailand, the UK,
Italy, Australia, Germany, Japan and China.
beverage options, and
optimizing revenue yield.
Given the sector’s outperformance and positive outlook
for tourism this year, it is no surprise that hospitality
is attracting more and more investors from around the
world. Navid Chamdia
Head of Real Estate Department,
3
World Travel & Tourism Council, Travel & Tourism Economic Impact 2019 Qatar Investment Authority
© Preqin Ltd. www.preqin.com 7THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
Opportunities in
Hospitality and the
Select Service Market
Pro-invest, on how the quality select service hotel segment offers attractive risk-
adjusted returns
Amid a slowing global economy and falling interest and recreational facilities, these hotels provide high-
rates, institutional investors looking for attractive risk- quality accommodation at an affordable price point.
adjusted returns are increasingly targeting hospitality From an investment perspective, select service hotels
real estate. The sector has proved resilient over the tend to be more efficient than full service hotels, and in
last few years, offering consistent returns that have markets where labour costs are high, they also tend to
outperformed listed real estate indices. generate higher Gross Operating Profit (GOP) margins.
Quality select service hotels capitalize on several key
The opportunity for returns has stemmed from growth trends in the hospitality space: rising demand
the growing tourism market. In UNWTO’s recent for centrally located, affordable, well-appointed
International Tourism Highlights, it was reported that accommodation with a contemporary look and feel;
international tourist arrivals reached 1.4 billion in and shifting consumer preferences in favour of hotels
2018, two years ahead of its forecast.1 Global economic whose design and services reflect an emphasis on
growth and a growing middle class in emerging practicality and issues such as sustainability, health
markets have been key drivers behind this activity, and and wellness.
as international tourism grows, so too do opportunities
in hospitality. Brand recognition is key in this sector, as hotel guests
– who are less impressed by star ratings and want to
Growing Popularity of Quality Select Service Hotels rely on trusted brands – want to know that they are
Provided they are skilfully acquired and actively making the smart choice no matter which city they are
managed, investments in hotels can generate attractive visiting. InterContinental Hotels Group’s (IHG) Holiday
yields and capital growth. Hotels also have the capacity Inn Express® is one of the world’s most trusted brands
to outperform Central Business District (CBD) office in this space. The franchise started in the US and has
building investments on a risk-adjusted returns basis. since spread to Europe, Asia and Australasia.
Furthermore, as real estate investors increasingly
target assets with impeccable sustainability The Australasian hospitality market is seeing growing
credentials, the Oceania region – which has achieved appetite for quality select service hotels. The market
higher Global Real Estate Sustainability Benchmark is underpinned by robust tourism growth, driven in
(GRESB) scores than any other region in the world – part by the depreciating Australian dollar, and some of
offers especially promising investment opportunities. the highest occupancy rates in the world, particularly
in Sydney and Melbourne. Strong demand for well-
For private equity investors seeking stable returns, designed amenities aimed at value-conscious visitors
quality select service hotels offer an appealing has made these hotels an increasingly popular option
investment opportunity. Catering to the short-stay across Australasia.
guest who requires limited food and beverage, retail
1
UNWTO. World Tourism Organization. International Tourism Highlights, 2019 Edition: http://www2.unwto.org/publication/unwto-tourism-highlights-2018
8Developing and Operating a Quality Select Service Ryde Sydney, this 192-room hotel is Pro-invest’s
Hotel Portfolio first operational asset. It has won multiple industry
The Pro-invest team is well versed with the mechanics awards, and in 2018 was named the HM Hotel Award’s
of rolling out a select service hotel portfolio. Between Best Midscale Hotel in Australia for the second year
1995 and 2002, Founder and CEO Ronald Stephen running.
Barrott worked in close collaboration with IHG to lead
the roll-out of 15 quality select service hotels under the Integrating Sustainability Across the Group
Holiday Inn Express® brand across the UK. Pro-invest is also a committed GRESB member,
targeting a year-on-year score improvement as it seeks
Pro-invest has a clearly defined site acquisition to continuously progress along a comprehensive set of
strategy, seeking prime sites with high market demand ESG agendas. As of 2019, Pro-invest places first of the
locations suitable for the roll-out of the Holiday Inn hotel groups in the Asia-Pacific region and fifth globally
Express® product across Australia and New Zealand. on the GRESB performance charts.
Under its Australian Hospitality Opportunity Fund I
and Australian Hospitality Fund II, Pro-invest has a On an asset level, for instance, the Holiday Inn
portfolio of 12 hotels (amounting to over 2,500 rooms). Express® Sydney Macquarie Park has also been
To date, Pro-invest’s portfolio is well positioned recognized for its achievements in sustainability. As
in the prominent locations of Sydney, Melbourne, certified by the Australian Government’s National
Auckland, Brisbane, Adelaide, Newcastle, Queenstown, Australian Built Environment Rating System (NABERS)
Parramatta and the Sunshine Coast. Within its current – which measures a building’s performance on a 6-star
portfolio, four hotels are currently operational and have scale – the Sydney Macquarie Park asset has achieved
been well received by their respective markets, while a 4.5-star NABERS Energy and 4.5-star NABERS Water
the remaining eight hotels are under various stages of rating for two consecutive years. To date, the Sydney
construction. Macquarie Park-based hotel holds one of the highest
NABERS Energy and Water ratings in Australia for
Under a Master Development Agreement with IHG, the hotel asset class. Through continuous efforts to
the Australian Hospitality Opportunity Fund I has laid enhance the asset’s efficiency, the hotel reduced its
the foundations for the Holiday Inn Express® brand’s carbon footprint by 7% as demonstrated by its 2018
expansion, with approximately 50 prime target areas NABERS Energy certification.
identified. Comprising eight hotels, the Australian
Hospitality Opportunity Fund I is a widely held Managed On an operating front, Pro-invest’s hotels additionally
Investment Scheme, allowing for a final withholding tax incorporate environmentally considerate initiatives
rate of 15%. Pro-invest’s Holiday Inn Express® hotels such as the ‘A Greener Stay’ initiative, which enables
are part of a hotel portfolio which is targeting an IRR of guests staying two or more nights to opt out of
20%. Australian Hospitality Opportunity Fund II builds housekeeping while in turn being rewarded with bonus
on the success of Pro-invest’s first fund, growing the IHG Reward points. This initiative engages carbon-
quality select service hotel footprint in the region. conscious guests, assists the hotel in reducing its
laundry, energy and water consumption, as well as its
The first Australian Holiday Inn Express® opened to waste production, and enables continuous financial
the public in Sydney Macquarie Park in April 2016. savings to be recorded month on month.
Centrally located in the commercial precinct of North
© Preqin Ltd. www.preqin.com 9THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
Taking Select Service
Hotels to the Next
Level
Pro-invest Group Founder & CEO Ronald Stephen Barrott discusses rolling out a
quality select service hotel portfolio across Australia and New Zealand, capitalizing on
active asset management and the impact of ESG
Why has Pro-invest chosen to focus on hotels in
particular?
Hotels as an asset class are providing best-in-
class investment returns with strong capital growth
expectations. The risk/return profile of hotel assets
has been shown to be superior to other asset classes,
having similar volatility to industrial and office assets,
but with higher returns. Regardless of movements
in capitalization rate and economic conditions, the
hotel asset class demonstrates consistency in income
returns. Ronald Stephen Barrott
Founder & CEO, Pro-invest Group
I have over 40 years of experience in the real estate
investment, development and project management The quality select service sector is one of the fastest-
arena in markets across Europe, the Gulf Co-operation growing hotel segments globally, and it’s popular with
Council and Australasia, and I can confidently say investors because it tends to be more profitable and
that hotels have become an established, institutional- more resilient to economic downturns.
grade asset class, forming a significant part of many
investors’ portfolios. What makes Australia and New Zealand attractive
markets for quality select service hotels?
Pro-invest Group focuses on developing and operating Australia and New Zealand offer competitive cash-
quality select service hotels. Could you tell us more on-cash yields when compared with global markets,
about this segment of the hospitality sector, and why and there’s capacity for further yield tightening. For
it’s attractive for institutional investors? the seventh consecutive year up to 2018, we’re seeing
Select service hotels don’t have to offer all the usual a tightening of yields for hotel assets, and there’s
amenities that full service hotels do, which means more and more capital actively circling the sector.
they require less capital expenditure, have lower fixed Although rates are now approaching record levels for
operational costs and enjoy higher margins. At Pro- Australia, they remain below those being achieved
invest, we focus on quality select service hotels, which in international markets. Furthermore, the income
are different from the more basic select service or returns of Australian institutional-grade hotels have
budget hotels in a couple of ways. Quality select service continuously demonstrated low volatility over past
hotels have strong brand recognition; there’s more of years when compared to their peers.
an emphasis on up-to-date design in rooms and shared
spaces; and in the case of Pro-invest’s portfolio of
hotels, they are rated 4.0-stars for their facilities.
10What are the target markets for quality select service Fig. 2: Select Service Hotels Provide Superior
hotels, and how quickly are these markets growing? Margins vs. Full Service
At Pro-invest, our quality select service hotels
100% ~85-100%
principally target corporate clients as well as
90%
domestic and international leisure travellers. That
80%
said, our larger properties also cater to domestic and
70% ~65%
international tour groups as well as sporting groups.
60%
On average, 70% of our guests are domestic travellers,
50% ~30-55%
while corporate guests comprise approximately 40% of
40%
our total business mix. ~20-40%
30%
20%
Corporate travel in Australia remains robust due to a
10%
relatively healthy economic environment. As long as
business activity continues on its current trajectory, 0%
Rooms Revenue as % of EBITDA Margin
demand for accommodation will continue to grow. Total
Full Service Select Service
Both Australia and New Zealand have consistently Source: Pro-invest Group Research
posted healthy tourism growth figures along with hotel
KPIs that rival other developed markets globally. The performing very well in the US, and we successfully
devaluation of the Australian dollar should make our launched it in the UK. Other members of our team –
shores more attractive to key source markets while like our Managing Director of the hotels groups, Phil
also boosting domestic leisure demand. Kasselis – came to us from IHG, and he also worked to
bring the Holiday Inn Express® to new markets around
This is good news for quality select service hotels, the world.
as leisure travellers are increasingly seeking value-
for-money accommodation choices. The benefit of In 2013, when we were establishing Fund I, we signed
the Holiday Inn Express® brand is that it's a global a Master Development and Franchise Agreement with
hotel brand which provides travellers with “everything IHG for the roll-out of the Holiday Inn Express® brand
they need and nothing they don’t” – a great sleep across the Australasia region. Our first Holiday Inn
experience, decent shower, complimentary breakfast Express® hotel, located in Sydney Macquarie Park,
and free unlimited WiFi, all in a contemporary hotel opened in Q2 2016. By the end of 2017, we had opened
setting. All our properties are located in prime another two Holiday Inn Express® hotels in the key
locations close to commercial and leisure precincts markets of Brisbane and Adelaide, with our fourth
and tourist attractions, enabling us to attract a variety operational Holiday Inn Express® hotel opening in
of guests. Newcastle during Q1 2019 – all hotels which have been
very well received by their respective markets.
Most tourists nowadays know what they want and will
not put up with sub-standard hotel accommodation Taking a trusted brand and launching it in new markets
or poor service. Their expectations are much greater is very much part of our ethos at Pro-invest. We were
today than say 20 years ago. Hotels that are able to founded in 2010 with the vision to create an investment
cater to this clientele will outperform older 4.0- and firm characterized by an entrepreneurial spirit and
5.0-star hotels that have not bothered to renovate and a global perspective, with the agility to effectively
keep up with consumer trends. respond to market opportunities and challenges.
In 2016, Pro-invest was first to introduce the quality I should add that the Holiday Inn Express® hotels
select service Holiday Inn Express® brand to Australia we manage are designed and developed to be the
and New Zealand as part of its Fund I portfolio of equivalent of 4.0-star rated hotels. As is often the
hotels. Could you tell us how this came about? case throughout the Asia Pacific region and following
Our team at Pro-invest has a long history of working a detailed market study of the Australian and New
with IHG for the roll-out of the select service Holiday Zealand hotel market and guest preferences, we
Inn Express® brand – that history spans more than ensured that our hotels are designed to be of a higher
25 years. Around the late 1990s, the UK company I quality than a typical Holiday Inn Express® hotel in
was heading up partnered with IHG, which owns the America or Europe.
Holiday Inn Express® brand. This was a brand that was
© Preqin Ltd. www.preqin.com 11THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
How has the market responded to the roll-out of the management, allocations to alternative asset classes
Pro-invest hotel portfolio? have the potential to outperform traditional equities
Our assets have consistently been achieving strong and fixed income securities on a risk-adjusted basis
guest satisfaction scores relative to their respective over the long term.
benchmarks. Our Holiday Inn Express® portfolio has
also been recognized by the hospitality industry. For Today, Pro-invest has grown to be a unique platform
instance, at the most recent 2019 Annual HM Hotel covering the entire hospitality lifecycle: from
Awards, our Holiday Inn Express® Adelaide City Centre development to operations, and from hotel asset
was voted ‘Highly Commended’ in the Best Midscale management to fund and investment management
Hotel Category. Our Holiday Inn Express® Melbourne capabilities. Having control and oversight of the
Southbank has also been listed as Finalist for the entire lifecycle of our portfolio of hotels, along with
Urban Developer Awards for the category of Excellence sustainability measures implemented throughout the
in Sustainable Design. Further, to emphasize how well life span of the hotels we manage, enables us to derive
the roll-out of our portfolio is being received by the tangible advantages.
market, during 2018 we received several prestigious
awards in categories such as Winner – Best Midscale Offering a full suite of service capabilities for your
Hotel, Highly Commended – Hotel Brand of the Year clients, does Pro-invest focus on the roll-out of
and Highly Commended – Best New Hotel at the 2018 hotels only or does your business extend to other
Annual HM Hotel Awards. opportunities?
In addition to our efforts in developing hotels from the
These awards marked a significant milestone for ground up to then operate and actively manage them
Pro-invest’s hotel portfolio, recognizing our team’s across their full lifecycle, our service capabilities have
ongoing efforts to exceed brand standards and deliver evolved to identify and create off-market deals which
exceptional service since we introduced the Holiday Inn extend to both hotel and commercial assets. With
Express® brand to the Australian hotel market in 2016. our in-house expertise, our service capabilities have
expanded to acquiring assets which we then reposition,
Pro-invest has a unique PERE business model that rebrand or refurbish, to then actively manage these
has several in-house services on offer for the roll-out assets to improve operational efficiency and asset
of its hotel portfolio. Can you tell us about these and quality. At Pro-invest, we approach every investment
how they interrelate with one another? as unique and recognize that our clients’ requirements
While some financial investors regard developing may evolve during their investments and our services
property as a risk element, at Pro-invest we have come are tailored to specific investments, providing flexibility
to see it as an opportunity to create additional upside to achieve the best outcome.
and increase the return profile of an investment.
What is the tangible value-add proposition that
Furthermore, many large institutions have come to you believe sets Pro-invest apart from other firms
realize that they want people on the ground who can operating in this space?
manage their assets for them. To take quality select The Pro-invest team is focused on value-add
service hotels to the next level, you need high-quality, across the asset lifecycle. Collectively, our team
proactive management capability. Through proactive has an extensive track record in PERE with a team
Fig. 3: Active Asset Management from Pro-invest
In-House
Geographic Real Estate Team for In-House In-House
Investment Asset Class Design & Team for In-House Asset
Purpose Focus Focus Development Redevelopment Operations Management
By acquiring new sites or
well-positioned assets at a
discount to replacement cost,
Pro-invest Group actively Europe, Hospitality,
creates value-add through
in-house development,
Middle East,
Asia
Commercial,
Retail
repositioning, operation
and asset management
capabilities.
12seasoned in developments, operations and asset ESG efforts are executed and appropriately leveraged
management which has spanned internationally. Our across the business.
strong knowledge of the Australian and New Zealand
real estate market and extensive national network Further, Pro-invest enhances its investments via yield-
of property owners and agents assist our team in accretive ESG initiatives and mitigates resource price
acquiring predominantly off-market opportunities volatility on its fund returns by reducing consumption
and at the right price. Our in-house development in areas such as energy and water use.
team is motivated to deliver the finest product in the
least amount of time feasible. We have a network of With ESG engrained throughout the lifecycle of
specialized consultants with proven track records in each hotel, Pro-invest inherently strives to achieve
the hotel industry, and we work with them on layout, excellence in sustainable design. Our typical base hotel
space planning, design and procurement to ensure that is designed to achieve a 4.5-star NABERS in design.
every project is developed in the most efficient manner. We collaborate with industry-leading institutions –
We work with a number of pre-qualified builders to such as the Clean Energy Finance Corporation1 – to
ensure that they comprehend the product and are 'on target even higher NABERS ratings, which translate
the same page' with respect to the design outcome to an enhanced efficiency of our hotels across design,
objectives and associated costs. development and operations.
Once operational, we continue to seek strategies to As our hotel portfolio gains traction, so does our
boost efficiencies and generate greater returns, and sustainability journey. For instance, on the operational
we leverage our strong relationship with IHG along the front, our hotels have incorporated a host of initiatives
way. We leverage our expertise and proven track record targeting pressing issues such as energy and water
in building hotel assets while establishing high market consumption, and recycling efforts to minimize the
penetration and rapid ramp-up, supported the strong assets’ environmental footprint while ensuring the
brand recognition of Holiday Inn Express® and IHG’s initiatives make commercial sense for all stakeholders
strong system delivery. involved.
The asset and fund management teams are also
involved across the acquisition, development and
operations stages to ensure that the best possible
results are achieved for investors.
We’d like to congratulate
How have you incorporated ESG into your portfolio? Pro-invest Group for
We recognize that investors are increasingly placing
value on greater levels of transparency regarding the the significant steps
ESG performance of real assets portfolios. In line with
strategic objectives, we are dedicated to optimizing
they have taken to
the financial and social returns of the assets within manage sustainability-
both Fund I and II for our investors through a focus on
ESG. We benchmark our ESG efforts against other real related risks, identify
estate companies through leveraging our membership
with GRESB, participating each year in GRESB’s annual
opportunities, and find
real estate assessment. Pleasingly, since becoming ways to make positive real-
members in 2017 and with only a handful of assets at
that point in time, our sustained ESG efforts across a world impacts.2
growing portfolio have resulted in substantial year-on-
year uplifts. This is a direct result of our commitment
to factoring in ESG considerations across our entire Ruben Langbroek
business and respective hotels’ lifecycles, while also Head of Asia Pacific,
having a full-time resource dedicated to ensuring our Global Real Estate Sustainability Benchmark (GRESB)
1
The Clean Energy Finance Corporation provided an AUD 39mn construction and term debt facility to partially offset the additional capital expenditure involved
in uplifting the Holiday Inn Express Melbourne Southbank’s NABERS rating from 4.5-stars to 5-stars.
2
Pro-invest ranked number one among hotel portfolios in Asia-Pacific, and achieved a top-five position in the hotel sector globally, according to the 2019
GRESB benchmark results.
© Preqin Ltd. www.preqin.com 13THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT 14
Sustainable design and
construction can improve
the value of hotels by
making them more
resilient to climate change
and save energy costs by
making them more energy
efficient. The CEFC’s
investments not only help
increase the number of
NABERS rated hotels,
they can also demonstrate
that energy efficiency
initiatives deliver value to
shareholders.
Chris Wade
Executive Director, Property Lead,
Clean Energy Finance Corporation (CEFC)
© Preqin Ltd. www.preqin.com 15THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
Funds Closed Hit
Record High in 2018
Robust fundraising reflects healthy investor appetite for hospitality real estate
Thanks to consistent strong performance, investors Estate Credit Partners III ($6.4bn). All three are
are allocating an increasing amount of capital to global ‘hospitality-exposure’ funds, which means they include
hospitality real estate. Indeed, capital secured by hospitality as part of their investment strategy.
funds focused on the hospitality sector has more than
doubled over the past decade, hitting $31bn in 2017 Appetite for Hospitality-Focused Real Estate is
as seen in Fig. 4, the largest total in the years since Growing
the 2008 Global Financial Crisis (GFC). As more fund Along with rising demand for hospitality-exposure
managers target the hospitality market, competition is funds, there is growing appetite for ‘hospitality-
accelerating: a record 62 hospitality real estate funds focused’ funds (where hospitality is one of three types
reached a final close in 2018. of property assets targeted). Among the hospitality-
focused funds that have recently closed are Rockbridge
With the rise of the real estate mega fund (sized at Hospitality Fund VII, which closed on $417mn in 2017,
$5bn or more), even more capital is likely to pour and Magna Hotel Fund VI, which closed on $250mn in
into the hospitality space. Three of the five largest 2018 (Fig. 7).
real estate funds targeting hospitality property have
closed since the beginning of 2017: Blackstone Real Many more hospitality-focused funds are currently
Estate Partners Europe V ($8.7bn), Starwood Global seeking capital. These include Odyssey Real Estate,
Opportunity Fund XI ($7.6bn) and Broad Street Real which is targeting $500mn for its Odyssey Japan
Fig. 4: Annual Global Hospitality Real Estate Fundraising, 2004 - 2019 YTD
70 50
45 No. of Hospitality-Focused Funds
Aggregate Capital Raised ($bn)
60 Closed
40
No. of Funds Closed
50 35 No. of Hospitality-Exposure
40 30 Funds Closed
25
30 Aggregate Capital Raised ($bn)
20
by Hospitality-Exposure Funds
20 15
10 Aggregate Capital Raised ($bn)
10 by Hospitality-Focused Funds
5
0 0
Aggregate Capital Raised ($bn) -
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019 YTD
Total
Year of Final Close
Source: Preqin Pro. Data as of August 2019
16Boutique Hospitality Fund; Midas Hospitality, which (SCREP VI) from Hong Kong-based PAG Real Estate,
is targeting $100mn for its Midas Hotel Fund; and which closed on its hard cap of $1.9bn in 2017. SCREP
Pro-invest Group, which is targeting AUD 500mn for VI undertakes an opportunistic strategy and targets a
its second hotel fund, Pro-invest Australian Hospitality range of properties, including hotels, logistics, office
Fund II. and residential assets; the fund seeks to gain exposure
to Japan, South Korea and China.
An Increasingly Global Footprint
While North America remains the dominant market Healthy Demand for Opportunistic and Value-Added
for hospitality real estate, other regions are attracting Strategies
growing amounts of capital. In 2017, Europe’s share As Fig. 6 shows, opportunistic and value-added
of global hospitality fundraising hit a post-GFC peak strategies comprise the vast majority of hospitality
(Fig. 5), helped by Blackstone’s $8.7bn Real Estate fundraising each year. Yet, as more investors look for
Partners Europe V. With increasing investor demand stable returns, debt-focused vehicles are becoming
for hospitality markets across the Asia-Pacific region, increasingly attractive, with a record $11bn raised by
large funds are being raised in this space. These funds targeting investment in hospitality debt in 2018.
include Secured Capital Real Estate Partners VI
Fig. 5: Aggregate Capital Raised by Hospitality Fig. 6: Aggregate Capital Raised by Hospitality
Real Estate Funds by Geographic Focus, 2004 - Real Estate Funds by Primary Strategy, 2004 -
2019 YTD 2019 YTD
100% 100%
Proportion of Aggregate
90% 90%
Proportion of Aggregate
80% 80%
Capital Raised
70% 70%
Capital Raised
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
2019 YTD
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019 YTD
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Year of Final Close Year of Final Close
North America Europe Debt Core Core-Plus
Asia-Pacific Rest of World Value Added Opportunistic Distressed
Source: Preqin Pro. Data as of August 2019 Source: Preqin Pro. Data as of August 2019
Fig. 7: Notable Real Estate Hospitality Funds Closed
Fund Size Final Close
Fund Firm Firm Headquarters (mn) Date Sample Portfolio Property
Portfolio of Select Service
Pro-invest Australian
Pro-invest Group Sydney, Australia 500 AUD* Sep-19 Hotels throughout Australia
Hospitality Fund II
& New Zealand
Starwood Global Starwood Capital UK Hilton Hotel Portfolio,
Miami Beach, US 7,600 USD Mar-18
Opportunity Fund XI Group UK, $135mn, Feb-18
Magna Hospitality Garment District Hotel, US,
Magna Hotel Fund VI Rhode Island, US 250 USD Dec-17
Group $274mn, Feb-19
Greek Islands Hotel
Blackstone Real Estate
Blackstone Group New York, US 7,800 EUR Jun-17 Portfolio, Greece, $197mn,
Partners Europe V
Sep-19**
Pro-invest Australian Portfolio of 8 Holiday Inn
Pro-invest Group Sydney, Australia 380 AUD* Mar-16
Hospitality Fund I Express Hotels
Source: Preqin Pro
* Including co-investment.
** Estimated portfolio property.
© Preqin Ltd. www.preqin.com 17THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
Drivers of Growth:
Outperformance
Hospitality real estate outperforms MSCI US REIT Index as well as other real estate
segments
What is driving investor appetite for hospitality real Fig. 8: Horizon IRRs: Real Estate Hospitality vs.
estate? Strong, reliable performance is a key factor. MSCI US REIT
For a start, the sector has outperformed the public
market, beating the MSCI US REIT Index as measured 12%
by one- and five-year horizon IRRs (Fig. 8). 10%
8%
Annualized Return
Hospitality Trumps Other Areas 6%
The hospitality segment has also outperformed other
4%
real estate sectors across several vintage years.
2%
Median net IRRs in the hospitality space surpassed
0%
those for industrial, residential, retail and diversified
funds of vintages 2011, 2013 and 2015, the most recent -2%
year for which data is available (Fig. 9). -4%
-6%
Asian Hospitality Generates Top Performers 1 Year to 3 Years to 5 Years to
Dec-18 Dec-18 Dec-18
Regional performance data shows that real estate
Real Estate Hospitality MSCI US REIT
funds focused on Asia & Rest of World have
Source: Preqin Pro. Most Up-to-Date Data
Fig. 9: Median Net IRRs by Vintage Year: Real Estate Hospitality vs. Other Property Types
25%
Median Net IRR since Inception
20%
15%
10%
5%
0%
2010 2011 2012 2013 2014 2015
Vintage Year
Hospitality Diversified Industrial Residential Retail
Source: Preqin Pro. Most Up-to-Date Data
18outperformed funds focused on other geographies
across several vintage years. Median net IRRs for Asia
& Rest of World-focused funds of vintage years 2010,
2013, 2014 and 2015 have exceeded the global average
and regional counterparts (Fig. 10). With more capital
targeting high-growth Asian markets, funds are seeing
strong returns.
Indeed, three of the five top performing funds active
in the hospitality market invest in Asia. These are
Gaw Capital Partners’ Gateway Real Estate Fund
V, GreenOak Asia’s GreenOak Asia II and LaSalle
Investment Management’s LaSalle Asia Opportunity
Fund IV. The top performing fund – Gateway Real
Estate Fund V, which has an IRR of 51.4% – invests in a
range of property types including hospitality in Greater
China and the ASEAN region, with selected exposure in
Japan, South Korea and Australia.
We have always considered
hotels an integral part of
any diversified real estate
portfolio. It is not only
about location, location,
location: we search for
qualified operators and
managers who are able to
Fig. 10: Real Estate Hospitality Funds: Median run their hotels sustainably
Net IRRs by Vintage Year and Geographic Focus
20%
and profitably. The
18% location, property, concept
Median Net IRR since Inception
and operator all need to be
16%
14%
12%
10%
aligned in order to deliver
8%
6%
a successful and profitable
4% investment.
2%
0%
2010 2011 2012 2013 2014 2015
Global
Vintage Year
North America
Dirk Schuldes
Europe Asia & Rest of World Global Head Real Estate Markets Hospitality,
Source: Preqin Pro. Most Up-to-Date Data Commerz Real AG
© Preqin Ltd. www.preqin.com 19THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
Global Investors Flock
to Hospitality Real
Estate
North America-based investors dominate, making up more than 80% of the total
investor pool
Investors based in North America comprise the largest Fig. 11: Investors with a Preference for Real
proportion of LPs active in real estate hospitality, with Estate Hospitality by Investor Location
82% of the total (Fig. 11). As they look to high-growth
markets in search of yield, their geographic targets are 0.7% 0.2%
increasingly global. For example, Arkansas Teacher
2%
Retirement System, a public pension fund, has a North America
3%
$30mn commitment to LaSalle Asia Opportunity V. 12% Europe
This fund focuses on investment in a range of property
types, including hospitality, and is primarily focused on Asia
Australia, Japan and China with a secondary focus on
Australasia
Korea, Singapore, Hong Kong and Taiwan.
Middle East
Strong Demand for Value-Added and Opportunistic
82% Latin America &
Strategies Caribbean
The largest share of investors opt for funds with
value-added and opportunistic strategies (36% and
Source: Preqin Pro
Fig. 12: Investors with a Preference for Real Fig. 13: Proportion of Known Hospitality Real
Estate Hospitality by Investor Type Estate Fund Commitments in 2014-2019 YTD by
Strategy
30%
27%
1% 1% 1%
25%
21% Value Added
20% 18%
3%3% Opportunistic
15% 13%
Debt
36%
10% 8% 20%
6% Distressed
5%
2% 2% 2% 1% 1% Fund of Funds
0%
Co-Investment
Insurance
Foundation
Other
Asset Manager
Bank
Private Sector
Public Pension
Endowment
Superannuation
Wealth Fund
Pension Fund
Company
Family Office
Sovereign
Core
Plan
Scheme
Fund
35%
Core-Plus
Source: Preqin Pro Source: Preqin Pro. Data as of August 2019
2035% respectively, Fig. 13). Historically, these strategies Also noteworthy is the prominence of real estate
– which have a higher risk/reward profile when debt – just over one-fifth of investors have exposure
compared with core and core-plus investments – have to hospitality assets through debt vehicles. This type
made up most of the capital raised to target hospitality. of investing is attractive for investors seeking greater
capital protection and uncorrelated returns.
Fig. 14: Most Active Investors by Commitments to Hospitality-Exposure Funds
No. of Aggregate Known Committed Average Commitment
Location Commitments Capital ($mn) Size ($mn)
New York State Teachers' Retirement
US 16 1,253 78
System
Teacher Retirement System of Texas US 16 2,460 154
California State Teachers' Retirement
US 12 1,711 143
System (CalSTRS)
Missouri Local Government Employees
US 10 505 63
Retirement System
Illinois Municipal Retirement Fund US 9 415 52
Source: Preqin Pro. Data as of August 2019
Fig. 15: Most Active Investors outside of North America by Commitments to Hospitality-Exposure Funds
No. of Aggregate Known Committed Average Commitment
Location Commitments Capital ($mn) Size ($mn)
State Oil Fund of the Republic of
Azerbaijan 6 567 113
Azerbaijan
East Riding Pension Fund UK 4 116 29
Merseyside Pension Fund UK 4 37 12
Clwyd Pension Fund UK 3 29 10
Environment Agency Pension Fund UK 3 34 17
Source: Preqin Pro. Data as of August 2019
© Preqin Ltd. www.preqin.com 21THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
Hospitality Real Estate
Sees Healthy Deal Flow
The hospitality sector has enjoyed over $110bn in private capital injection since 2015
Buoyant fundraising, underpinned by strong Fig. 16: Annual Global PERE Hospitality Deals,
performance, has resulted in large inflows of capital 2012 - 2019 YTD
into the hospitality real estate market. Over $110bn of
private capital has been invested in the sector since 500 30
Aggregate Deal Value ($bn)
450
2015. This is driving a healthy pipeline of deals. 25
400
350 20
No. of Deals
Deal value hit a high of $28bn in 2017, more than 3x the 300
level seen in 2012, before tapering off to $27bn in 2018 250 15
200
(Fig. 16). In tandem with deal values rising, the number 10
150
of deals has increased. From 162 deals in 2012, the 100 5
number of deals jumped to a high of 429 in 2017 before 50
slipping to 416 deals in 2018. 0 0
2019 YTD
Jan-Aug 2018
2012
2013
2014
2015
2016
2017
2018
From Mega Funds to Mega Deals
Following the rise of mega funds, an increasing
number of mega deals are emerging in the hospitality
No. of Deals Aggregate Deal Value ($bn)
real estate space.
Source: Preqin Pro. Data as of August 2019
Fig. 17: Annual PERE Hospitality Deals by Fig. 18: PERE Hospitality Deals by Size and
Region, 2012 - 2019 YTD Region, 2012 - 2019 YTD
100% 100% 26 11 1
56 7 2
90% 90% 19
9
80% 192 39 5
80%
70%
Proportion of Deals
14
No. of Deals
70%
60% 48 18
213
60% 50%
50% 40%
30% 12
40% 30
425 125
30% 20%
10% 12
20%
0%
10% North Europe Asia Rest of World
0% America
2012 2013 2014 2015 2016 2017 2018 2019 Less than $50mn $50-99mn
YTD $100-249mn $250-499mn
North America Europe Asia Rest of World More than $500mn
Source: Preqin Pro. Data as of August 2019 Source: Preqin Pro. Data as of August 2019
22Of the 11 PERE hospitality deals sized at $1bn that Europe accounted for 28% and Asia & Rest of World
have been recorded so far, six were completed in the made up 9%.
past 18 months. The largest deal completed since 2018,
valued at $1.53bn, involves a property located at 701 Since 2012, higher-priced transactions have accounted
Seventh Avenue in New York City (Fig. 19). Indianapolis- for a greater proportion of hospitality PERE deals in
based real estate firm Maefield Development acquired Asia as compared with North America or Europe. Deals
its partners’ stakes and now owns the entire property, of over $100mn represent around one-third of all deals
a 39-storey, 350,000ft2 hotel and retail complex which completed in North America and Europe, while in Asia
includes the 452-room Marriott EDITION Hotel. that figure is 56%. One of the largest recent hospitality
deals in Asia involved Japan’s Sheraton Grande Tokyo
The UK has also been a hot market for hospitality Bay Hotel, located close to the Tokyo Disney Resort.
deals. For example, in November 2018 a $1bn portfolio Singaporean sovereign wealth fund GIC and Japan-
consisting of four Central London-based Grange hotels based REIT Invincible Investment Corporation acquired
was sold to London-based real estate firm Queensgate the 1,016-room hotel for JPY 100bn ($948mn) in 2017.
Investments. And earlier in the year, French hotel
investor Foncière des Régions acquired a portfolio of 14 A key trend in this market is institutional investors’
hotels located across the UK for £830mn. growing appetite for direct deals. While North America
is the primary focus, hospitality investing is becoming
A Global Market for Deals increasingly global. Asia looks set for further growth,
The US attracts the majority of PERE hospitality with Japan expected to benefit from an influx of
investment. Cities such as New York, Chicago, Miami tourists as the host of the 2020 Olympic Games in
and San Francisco – which are business hubs as well Tokyo.
as global tourism destinations – are some of the
most active locations for PERE hospitality investment
worldwide. As of August, North America was
responsible for 62% of global deals completed in 2019,
Fig. 19: Largest PERE Hospitality Deals in 2017-2019 YTD
Deal Deal Size Transaction
Asset Date ($mn) Type Buyer(s) Seller(s) Location(s)
Guangzhou R&F Beijing &
China, Hotel Portfolio Jul-17 2,804 Portfolio Dalian Wanda Group
Properties Wuhan, China
Witkoff, Ian Schrager
Maefield Company, New Valley,
701 Seventh Avenue Feb-18 1,530 Single Asset New York, US
Development Winthrop Realty Trust,
Carlton Group
London, UK, Hotel Queensgate
Nov-18 1,226 Portfolio Grange Hotels London, UK
Portfolio Investments
The Grand Wailea Jan-18 1,100 Single Asset Blackstone Group GIC Wailea, US
Foncière des London &
UK, Hotel Portfolio May-18 1,018 Portfolio Starwood Capital Group
Régions Manchester, UK
Source: Preqin Pro. Data as of August 2019
Fig. 20: Top Cities for PERE Hospitality Deals, 2017 - 2019 YTD
2017 2018 2019 YTD
No. of Aggregate Deal No. of Aggregate Deal No. of Aggregate Deal
City Country Deals Value ($mn) Deals Value ($mn) Deals Value ($mn)
New York US 21 1,749 24 5,210 5 570
London UK 10 1,348 10 521 2 20
Washington US 8 319 6 404 2 253
Chicago US 2 167 6 256 3 113
Tampa US 1 - 5 119 3 223
Source: Preqin Pro. Data as of August 2019
© Preqin Ltd. www.preqin.com 23THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
Rise of a
Global Market
AUM inflates as appetite for hospitality real estate grows among investors
Since 2016, real estate hospitality assets under Fig. 21: Global Real Estate Hospitality Assets
management (AUM) have posted steady growth: AUM under Management, 2007 - 2018
rose by 7% to $29bn as of December 2018 (Fig. 21).
However, the rising trend seen in the past three years 45
Assets under Management ($bn)
follows a sharp decline of more than a quarter (28%) 40
in 2016, when AUM slid from $37bn to $27bn in the 35
previous year. This is due in part to the liquidation of 30
several hospitality-focused funds that came the end of 25 19
20 34 35
15 36 35 29
their life span in 2015. As the universe of hospitality- 20
24
16 19
focused funds is still relatively small, single funds can 19
15
affect the overall market trend.
10
14 16 15
5 10 11 9
7 8 8
Value-added and opportunistic strategies made up the 4 5 6
0
majority (67%) of hospitality AUM (Fig. 22), with $10bn
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
and $9.2bn in assets respectively.
Dry Powder ($bn) Unrealized Value ($bn)
Source: Preqin Pro
Fig. 22: Global Real Estate Hospitality Assets under Management by Strategy, 2007 - 2018
100%
90%
Proportion of Total AUM
80%
70%
60%
50%
40%
30%
20%
10%
0%
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Opportunistic Value Added Debt Core Core-Plus Distressed
Source: Preqin Pro
24Asia-Pacific Growth
Hospitality AUM reflects the growing investor appetite
for global assets. Since the GFC, hospitality AUM in-
volving investment outside of North America has more
than doubled from $4.2bn in 2009 to $9.5bn in 2018.
As investor demand for exposure to hospitality assets
in the Asia & Rest of World region has risen, Asia-
& Rest of World-focused AUM has seen a steady
increase. Hospitality AUM focused on the region has
trebled from $1.6bn in 2009 to $5.1bn as of December
2018 (Fig. 23).
Hotels are an integral
part of our operational
real estate strategy.
With our 'bed strategy,'
we are tapping into the
global trend of increasing
middle-class and
international travellers.
However, as hotels are
operation-intensive assets,
Fig. 23: Asia- & Rest of World-Focused Real requiring daily attention
Estate Hospitality Assets under Management, of the manager, the key
2007 - 2018
6
to capturing growth and
mitigating the operational
Assets under Management ($bn)
5.2 5.1
risks of hotel property lies
5
4.6 4.7
in the expertise of the fund
4 3.7 3.6
3.0
manager.
3 2.7
2.2
2 1.8
1.6
1 0.6
0
Chenhui Xia, CFA
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Head of Real Estate Transactions,
Source: Preqin Pro Helaba Invest
© Preqin Ltd. www.preqin.com 25Auckland City Skyline Featuring Pro-invest Group’s Dual Branded Auckland City Centre Hotel
THE GLOBAL APPEAL OF HOSPITALIT Y REAL ESTATE: A PREQIN & PRO-INVEST REPORT
26© Preqin Ltd. www.preqin.com 27
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